A study on financial literacy and its impact on investment decision of professionals

Indians are facing major problems such as under insurance, debt trap, insufficient retirement fund and low return on investment due to low financial literacy. Indian economy has witnessed a number of structural and fundamental changes in the financial markets. While Indian economy is on growth trajectory, there is a wide spread realization amongst all in the financial spectrum that for such growth to be sustainable, a corresponding deepening of financial sector must precede. And, such deepening is possible, only when individuals and households are financially literate. Financial literacy is low even in advanced economies with well-developed financial markets. On average, about one third of the global population has familiarity with the basic concepts that underlie everyday financial decisions (Lusardi and Mitchell, 2011). The average hides gaping vulnerabilities of certain population subgroups and even lower knowledge of specific financial topics. Furthermore, there is evidence of a lack of confidence, particularly among women, and this has implications for how people approach and make financial decisions. The objective of this research is to investigate whether Financial literacy has an impact on the investment decisions of professionals. Another aspect which will be influenced by financial literacy is financial planning and it is important to individual's financial well being. Financial planning allows individuals to control their financial position. For this purpose, individuals need to recognize and set their priorities. Having a plan for spending, saving, and investing money makes a difference in how well financial needs and goals will be met. Meeting those goals require financial planning that considers all aspects of finance like budgeting and managing taxes, liabilities, purchase decisions, managing insurance, managing investment, retirement and estate planning (Kapoor et al.2014). The study focused on factors of financial literacy and financial planning among professionals. It found that the level of financial literacy among professionals is satisfactory. It is also found that the majority of respondents have a high level of financial literacy and are aware of various aspects of financial planning and are able to plan on their own irrespective of their subject of profession.